******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of ) ) MAXIMUM MEDIA, INC. ) (ASSIGNOR) ) ) and ) ) File Nos. BALH-960903GF RADIO ENTERPRISES, INC. ) BAL-960903GG (ASSIGNEE) ) BALH-960903GH ) For Assignment of Licenses of ) ) WQBJ(FM), Cobleskill, New York ) WQBK(AM), Rensselaer, New York ) WQBK-FM, Rensselaer, New York ) ) ) AND ) ) ) DJA MEDIA, INC. ) (ASSIGNOR) ) ) and ) File No. BALH-960903GL ) RADIO ENTERPRISES, INC. ) (ASSIGNEE) ) ) For Assignment of License of ) ) WXCR(FM), Ballston Spa, New York) MEMORANDUM OPINION AND ORDER Adopted: March 6, 1997 Released: March 7, 1997 By the Commission: Commissioner Chong issuing a statement. 1. The Commission has under consideration: (1) the above-captioned applications for assignment of the licenses of WQBJ(FM), Cobleskill, New York (File No. BALH-960903GF); WQBK(AM), Rensselaer, New York (File No. BAL-960903GG); and WQBK-FM, Rensselaer, New York (File No. BALH-960903GH) from Maximum Media, Inc. ("Maximum") to Radio Enterprises, Inc. ("REI"); (2) the above-captioned application for assignment of the license of WXCR(FM) (formerly WZRQ(FM)), Ballston Spa, New York (File No. BALH-960903GL) from DJA Media, Inc. ("DJA") to REI; and (3) a related request for waiver of 47 C.F.R. 73.3555(c), the Commission's one-to-a-market rule. The applications and the waiver request are unopposed. For the reasons set forth below, we grant both the waiver request and the assignment applications. Background 2. Clear Channel Radio, Inc., a subsidiary of Clear Channel Communications, is the 80 percent shareholder of REI. Clear Channel Television Licenses, Inc., another subsidiary of Clear Channel Communications, is the licensee of WXXA-TV, a UHF Fox affiliate licensed to Albany, New York. The Grade A contour of WXXA-TV overlaps Cobleskill, Rensselaer and Ballston Spa, the communities of license for WQBJ; WQBK and WQBK-FM; and WXCR, respectively. Accordingly, REI now seeks a waiver of the Commission's one-to-a-market rule in order to permit it to have ownership interests in these radio stations and WXXA-TV. 3. REI bases its waiver request on the one-to-a-market waiver standards adopted in the Second Report and Order in MM Docket 87-7, 4 FCC Rcd 1741 (1989) ("Second Report and Order"), recon. granted in part and denied in part, 4 FCC Rcd 6489 (1989) ("Second Report and Order Recon."). Under these criteria, the Commission presumptively favors waiver requests involving station combinations serving the top 25 markets where there remain at least 30 separately owned, operated and controlled broadcast licenses or "voices" after the proposed combination is consummated ("top 25 market/30 voice standard"). The Commission also favors requests involving "failed" broadcast stations, that is, stations that have not been operating for a substantial period of time, e.g., four months, or that are involved in bankruptcy proceedings. See 47 C.F.R.  73.3555 note 7. Waiver requests not eligible for consideration under either the "top 25 market/30 voice" or the "failed" station standards are subject to a more rigorous case-by-case review, as set forth in the Second Report and Order. 4. Albany-Schenectady-Troy is the 52nd largest Nielsen Designated Market Area ("DMA"). Moreover, there is no indication that this waiver request involves a "failed" station. In any event, REI's waiver request must be evaluated under the case-by-case standard because the proposed transaction involves the common ownership of more than one same-service radio station with a television station. Under this approach, the Commission takes into account the following criteria: (1) the potential public service benefits of joint operation of the facilities such as the economies of scale, cost savings and programming and service benefits; (2) the types of facilities involved; (3) the number of media outlets owned by the applicant in the relevant market; (4) the financial difficulties of the stations involved; and (5) the nature of the relevant market in light of the level of competition and diversity after the joint operation is implemented. See Second Report and Order, 4 FCC Rcd at 1753-54. Some of these factors may not be relevant in certain circumstances. See Second Report and Order Recon., 4 FCC Rcd at 6491. REI submits a showing which addresses each of the five criteria. Waiver Showing 5. Benefits of Joint Operation. REI contends that the proposed combination of WQBJ, WQBK-FM, WQBK, WXCR and WXXA-TV would provide significant cost savings and programming benefits. In total, REI projects that consummation of the proposed station sales would produce immediate savings of approximately $210,000 per year, with additional anticipated annual savings of $52,000 in three to seven years when a proposed studio consolidation is completed. First, REI states that common ownership of these broadcast properties would enable the stations to share administrative and technical staffs, resulting in an estimated annual savings of $40,000. Second, REI contends that its radio stations could use WXXA-TV's studio to produce video promotional spots, thereby saving $10,000 per year. Third, REI states that the radio and television stations would engage in joint promotions, community initiatives and public service events, which would result in estimated annual savings of $130,000. Fourth, REI contends that it would be able to further promote television and radio employment by women and minorities in the Albany, New York community by combining the stations' equal employment opportunity efforts. Fifth, REI states that common ownership of the stations would provide substantial benefits in the areas of local news and public affairs programming. The radio stations would have access to WXXA-TV's news department, thereby providing opportunities for in-depth coverage of local, state, and national news at a savings of $30,000 per year. Sixth, REI states that as a result of the potential cost savings and the availability of WXXA-TV's Director of Public Service, WQBK will initiate a new, weekly one hour public affairs program devoted to issues of concern to Albany residents. Finally, REI notes that common ownership of the stations would ultimately permit consolidation of studio facilities for three of the REI stations (when their current leases expire in 2000 and 2004) at a proposed new WXXA- TV studio site. This consolidation would save approximately $52,000 per year in studio rental costs. 6. Other Media Outlets/Types of Facilities. WXCR and WQBK-FM are Class A facilities, each operating at the equivalent of 6 kW. There are an additional 16 Class A FM Stations licensed to communities in the Albany metro market. Five kW WQBK is one of fourteen AM stations in the Albany metro market. WQBJ is a 50 kW Class B station, although REI states that WQBJ's primary coverage area lies well to the west of the Albany-Schenectady-Troy market. There are 7 other Class B FM stations licensed to communities within the Albany metro market. WXXA-TV is a UHF station, operating on Channel 23 as an affiliate of the Fox network. WXXA-TV competes with 3 VHF television stations and 4 other UHF television stations which are licensed to communities in the Albany-Schenectady-Troy DMA. REI notes that Clear Channel possesses no other media interests in the Albany-Schenectady-Troy market. 7. Financial Condition. According to REI, WQBK, WQBK-FM and WQBJ have lost over $3 million during the last three years. REI states that Maximum emerged from bankruptcy only two years ago, but has been unprofitable since its reorganization. According to REI, these stations are highly leveraged and have repeatedly failed to generate sufficient revenues to meet debt service obligations. REI contends that potential buyers have shown little interest in Maximum's previous efforts to market the stations. REI also states that WXCR was "near bankruptcy" when it was acquired by DJA in 1992. It is REI's position that Clear Channel's equity investment and a working capital loan would allow REI to strengthen these four stations, thus allowing them to become viable competitors in the Albany-Schenectady-Troy metro market. 8. Competition and Diversity. REI asserts that its acquisition of WQBK, WQBK-FM, WQBJ and WXCR would have no significant impact upon media diversity or advertising competition in the Albany-Schenectady-Troy market. Albany-Schenectady-Troy is the 52nd largest DMA television market. REI has provided a showing which indicates that there are 14 AM stations and 29 FM stations licensed in the Albany-Schenectady-Troy television metro market and 3 VHF television stations and 5 UHF television stations licensed in the Albany-Schenectady-Troy DMA. These 43 radio stations and 8 television stations are licensed to 32 separate owners. REI states that a wide variety of other media are available, including local newspapers, VCRs and cable television. In particular, REI states that there are at least five daily and ten weekly newspapers in the DMA, as well as several cable systems with a combined penetration rate of 70 percent. Discussion 9. Radio Ownership Rules. We turn first to REI's compliance with our local radio ownership rules. REI has submitted the required contour overlap showings which indicate that because of the overlap of the city grade contours of WQBK-FM and WXCR and the overlap of the city grade contours of WQBJ and WXCR, two distinct radio markets are created. The first market, in which WQBK, WQBK-FM and WXCR are located, contains 18 commercial radio stations. Under our rules, in a radio market with 15-29 commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which are in the same service. See 47 C.F.R.  73.3555(a)(1)(ii), as amended by Broadcast Radio Ownership, 11 FCC Rcd 12468 (1996). REI's proposed ownership of two FM stations and one AM station in this market complies with the local ownership cap. The second market, in which WQBJ and WXCR are located, also contains 18 commercial radio stations. As with the first market, REI could own, operate or control up to six commercial radio stations, with no more than four in the same service. Accordingly, REI's proposed ownership of WQBJ and WXCR in this market also complies with the rules. In addition, staff analysis indicates that WQBJ garners 0.7 percent of radio advertising revenues in the Albany radio metro market; WQBK-FM, 5.2 percent; WQBK, 1.7 percent; and WXCR, 2.8 percent. This combined 10.4 percent of the radio advertising revenues in the Albany radio metro market does not raise a concern that REI would be able to impede competition in that market. See paragraphs 13-15, infra, and Shareholders of Citicasters, Inc., FCC 96-380 at paras. 22-23 (released September 17, 1996) ("Citicasters"). We conclude that, with respect to local radio ownership, nothing in the record in this case suggests that REI's acquisition of WQBK, WQBK-FM, WQBJ and WXCR would be inconsistent with the public interest. 10. One-to-a-Market Waiver. As noted in paragraph 9, supra, the proposed radio station combination involves two distinct radio markets for duopoly purposes. However, the Grade A contour of WXXA-TV encompasses the communities of license of all three FM stations which REI proposes to acquire from Maximum and DJA. As a result, we will analyze REI's request for a waiver of  73.3555(c) of the Commission's rules as a request to own three FM stations, one AM station and a UHF television station in the Albany-Schenectady-Troy market. In this regard, we note that the Commission has recently approved waivers of the one-to-a-market rule where the radio combinations involved were governed by the ownership standards adopted in the Telecommunications Act of 1996. See Stockholders of Infinity Broadcasting Corp., FCC 96-495 (released December 26, 1996); see also S.E. Licensee G.P., FCC 96-464 (released November 27, 1996); Citicasters. In these cases, we declined to grant requested permanent waivers of the one-to-a- market rule where an applicant would exceed the local radio ownership cap permitted when the Telecommunications Act of 1996 was enacted. We also concluded, however, that temporary waivers of the one-to-a-market rule pending our resolution of the one-to-a-market issues raised in the broadcast ownership rulemaking proceeding was justified in the particular circumstances of those cases, and would not, given their limited duration, unduly affect competition and diversity in the relevant markets. For the same reasons, we conclude that a permanent, unconditional waiver would not be appropriate here. The applicant, however, has justified grant of a temporary waiver based upon our analysis of REI's case-by-case showing in support of its permanent waiver request. 11. REI would realize substantial cost savings and economic benefits from the joint ownership of WQBK, WQBK-FM, WQBJ, WXCR, and WXXA-TV. In total, REI projects that consummation of the proposed station sales would produce immediate savings of approximately $210,000 per year, with additional anticipated annual savings of $52,000 in three to seven years when a proposed studio consolidation is completed. REI has pledged to enhance the public affairs programming offered on its stations and will specifically create a new, hour-long public affairs program on WQBK. The Commission has stated that "combinations involving UHF TV, small AM or Class A FM stations may provide relatively greater public interest benefits and impose relatively fewer public interest costs." See Second Report and Order, 4 FCC Rcd at 1753. The combination for which the instant waiver is requested involves a UHF station, WXXA-TV, which competes with 3 VHF stations in the Albany-Schenectady-Troy market, all of which garner larger audience share ratings than WXXA-TV. Although WQBJ is the only Class B FM station in the Albany- Schenectady-Troy market authorized to operate at 50 kW, REI has shown that it must compete against 7 other Class B FMs (with authorized power of between 10 and 17 kW) not under REI's control. Furthermore, REI states that WQBJ's primary coverage area lies well to the west of the Albany-Schenectady-Troy metro market. Additionally, the proposed combination involves a 5 kW AM station, a 4.1 kW FM station, and a 6 kW FM station, all relatively low-powered stations. "[A]s the level of competition and diversity in a market increases, [the Commission's] concerns grounded in the technical strength of the combining facilities decrease." Louis C. DeArias, 11 FCC Rcd 3662, 3666 (1996). Given the substantial competing facilities in the Albany-Schenectady-Troy market, we find on balance that the proposed combination does not present issues of market dominance inconsistent with our core competition and diversity concerns. 12. With respect to finances, WQBK, WQBK-FM, and WQBJ have collectively lost over $3 million in the last three years. We are persuaded that common ownership of WQBK, WQBK-FM, WQBJ, WXCR, and WXXA-TV would serve the public interest by helping to revitalize these radio stations, thereby allowing REI to bolster its programming and provide an increased degree of competition to the other broadcast stations in the Albany-Schenectady-Troy market. 13. Finally, REI has shown that the proposed combination will not create any undue concentration of ownership or control of the broadcast media in the Albany-Schenectady-Troy market. The market is highly competitive, both in terms of the relevant market shares of the stations involved in this transaction and the number of other broadcast stations in the market. In the Arbitron Winter 1996 ratings, "Target Listener Trends, Persons 12+, Monday-Sunday, 5 a.m.-midnight," for the Albany-Schenectady-Troy radio survey area, WQBK, WQBK-FM, WQBJ and WXCR received combined average quarter hour listenership (AQH) shares of 9.7. As REI notes, this combined share is far lower than any of the three dominant radio groups in the Albany-Schenectady-Troy market. In the May 1996 Nielsen Station Index report, WXXA-TV had a 6 share, putting it in fourth place behind the local ABC, CBS and NBC affiliates (with shares of 16, 20 and 22, respectively). Furthermore, there are 14 AM stations and 29 FM stations licensed in the Albany-Schenectady-Troy television metro market and 3 VHF stations and 5 UHF stations licensed in the Albany-Schenectady- Troy DMA, which is the 52nd largest DMA. These 43 radio stations and 8 television stations are licensed to 32 separate owners. A wide variety of other media are available, including several cable systems, which reach 70 percent of total households, and at least 5 daily newspapers and 10 weekly newspapers. We have waived  73.3555(c) in similar circumstances. See Louis C. DeArias, 11 FCC Rcd at 3666 (31 separate voices, 2 daily newspapers, and 57.9 percent cable penetration); Moosey Communications, Inc., 8 FCC Rcd 5247, 5249 (1993) (24 separate voices, 1 daily newspaper, and 73 percent cable penetration); Liggett Broadcast, Inc., 7 FCC Rcd 7124, 7125-26 (1992) (28 separate voices, 7 daily newspapers, and 51 percent cable penetration); South Central Communications Corp., 5 FCC Rcd 6697, 6698-99 (1990) (26 separate voices, 2 daily newspapers, and 61.9 percent cable penetration). 14. With respect to economic concentration and competition, our independent analysis indicates that REI's four radio stations will garner a 10.4 percent share of the radio advertising revenue in the Albany-Schenectady-Troy market, while WXXA-TV garners 12.1 percent of television advertising revenue. Together, the proposed combination will have 11.6 percent of the market's broadcast advertising revenue. We do not believe that these figures are so significant as to raise a concern that the proposed acquisition would affect unduly diversity and competition in the Albany-Schenectady-Troy market. 15. We conclude, based on the record, that granting a temporary, conditional waiver will not unduly affect competition or diversity in the Albany-Schenectady-Troy market. The market is both diverse and highly competitive, and this transaction involves a non-dominant UHF television station. Furthermore, three of the radio stations are relatively small. While REI's commonly-owned facilities are technically significant, competing facilities do exist. Moreover, REI has demonstrated that there are economic efficiencies and program service benefits to be gained that support grant of a temporary, conditional waiver. Ordering Clauses 16. Accordingly, IT IS ORDERED, That the request for a permanent waiver of the Commission's one-to-a-market rule, 47 C.F.R.  73.3555(c), to permit common ownership of Stations WQBJ, Cobleskill, New York; WQBK, Rensselaer, New York; WQBK-FM, Rensselaer, New York; and WXCR, Ballston Spa, New York IS HEREBY DENIED. 17. IT IS FURTHER ORDERED, That a temporary waiver to permit common ownership of Stations WQBJ, Cobleskill, New York; WQBK, Rensselaer, New York; WQBK-FM, Rensselaer, New York; and WXCR, Ballston Spa, New York IS HEREBY GRANTED, subject to the outcome in the pending television ownership rulemaking proceeding, Second Further Notice of Proposed Rulemaking, MM Docket Nos. 91-221 & 87-8, FCC 96-438 (released November 7, 1996). Should divestiture be required as a result of that proceeding, Radio Enterprises, Inc. is directed to file an application for Commission consent to sell the necessary station(s) within six months from the release of the Orders in those proceedings. 18. IT IS FURTHER ORDERED, That, having found the applicants fully qualified, the above-captioned applications to assign the licenses of WQBJ, Cobleskill, New York; and WQBK and WQBK-FM, Rensselaer, New York from Maximum Media, Inc. to Radio Enterprises, Inc. (File Nos. BALH-960903GF, BAL-960903GG & BALH-960903GH), ARE HEREBY GRANTED. 19. IT IS FURTHER ORDERED, That, having found the applicants fully qualified, the above-captioned application to assign the license of WXCR, Ballston Spa, New York from DJA Media, Inc. to Radio Enterprises, Inc. (File No. BALH-960903GL), IS HEREBY GRANTED. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary